South African petrochemical company Sasol (SOLJ.J) is taking steps to reduce the impact of newly imposed U.S. tariffs on its chemical exports, which could affect sales worth about $80 million, Chief Financial Officer Walt Bruns said on Monday.
The 30% tariff, introduced this month by President Donald Trump on goods from South Africa, poses a risk to billions of dollars’ worth of exports from the country’s economy into the U.S.
Sasol, which has chemical operations in the U.S., exports roughly 10% of its South African chemical output to the American market.
“We estimate the impact on our business to be around $80 million, of which we believe we can mitigate at least $20 to $30 million,” Bruns told Reuters.
“Some of our customers are willing to allow us to pass on the higher cost to them. If not, then we can re-allocate some of the product to Asia, so there’ll be a bit of a shift from a supply chain point of view,” he added.
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According to Reuters, Sasol CEO Simon Baloyi downplayed the risk to the company, telling analysts, “The U.S. tariffs were not a major threat to the company. We produce what we sell in the U.S. mainly in the U.S.”
Earlier the same day, Sasol reported basic earnings per share of 10.60 rand ($0.6070) for the year ended June 30, compared with a loss of 69.94 rand per share the previous year.
The improved results were driven by higher chemical prices, stricter cost controls, and fewer asset writedowns.
The company also received a payout of 4.3 billion rand from state-owned logistics group Transnet after a legal claim that Transnet had overcharged Sasol for oil transportation over several years.
Sasol recorded much lower impairments during the period, totaling 20.7 billion rand, compared to 74.9 billion rand the year before.
These writedowns were linked to its Secunda and Sasolburg liquid fuels refineries, its Mozambique gas production sharing agreement and exploration project, and its chemicals business in Italy.
Despite the improved results, Sasol again opted not to pay dividends, citing net debt of $3.7 billion, which remains above its $3 billion cap under its dividend policy.
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Image Credit: Bloomberg
